ABSTRACT

SOME PRODUCTION EFFICIENCIES IN THE JAMAICAN DAIRY FARMING

INDUSTRY

MILLER, R.C.; FFRENCH, D. L.; JENNINGS, P. G.

JAMAICA DAIRY DEVELOPMENT BOARD

The Jamaican dairy farmer has traditionally placed his focus on individual cow production in an attempt to increase overall dairy milk volumes. The use of imported feed concentrate has become an acceptable strategy in dairy cattle production systems. No doubt, due to its ease of application and quick response. However, with this focus, farmers have failed to fully exploit the true potential of improved pastures. The use of fertilizer is much neglected. With the high cost of concentrate feeds it has become increasingly clear that for any significant expansion of the dairy industry to be made, greater emphasis must be placed on intensifying the use of land.

Increased use of nitrogen fertilizer and irrigation (where possible) are suggested. The dairy farmer must now look at yield per hectare as he maximizes his income from his limited land resource. The use of fertilizer on irrigated lands will allow him to increase carrying capacities and lower his cost of production per hectare.

The results of the study indicated medium size farms were more efficient than large farms in profitability ratios such as margin per hectare (59.76 percent better) and margin per cow (10.51 percent better). Large farms exhibited greater yields per hectare (8.89 percent) and per cow (10.84 percent). The small farm in the study, however, had the lowest variable cost per litre at $8.00.

The study also showed irrigated farms to be 277.8 percent more efficient than non-irrigated farms in margin per hectare and 76.65 percent better in stocking rate. The study supports the use of irrigation and fertilizer in the development of a profitable and sustainable dairy industry. The use of concentrate feed should be considered only after optimal production from pasture is achieved.

SOME MILK PRODUCTION EFFICIENCIES IN THE

JAMAICAN DAIRY INDUSTRY

Introduction

The mission of the Jamaica Dairy Development Board is to "achieve self sufficiency in milk production on a sustainable, long term and globally competitive basis." An objective of the Board is to make milk production a more profitable venture thereby improving the rural economy. Its aim is therefore to increase milk production, animal productivity, and returns to dairy farmers. All this should be achieved through policy interventions and optimal utilization of Jamaica’s natural and human resources. Land and water are involved here.

It is well known that milk production on a national level has stagnated and even declined over the last several years. During the period 1995-1999 production stood at 27 million litres per annum although having peaked at 38 million litres in the years 1990-1994. Producers of fresh milk became discouraged, as they couldn’t compete with cheaper milk solids that were allowed in the country under the Free Trade Act.

In 1999 a total of 153.4 million litres of milk and milk products was consumed in Jamaica. Of this amount only 28 million litres was from local production. This highlights the challenges the local producers are now faced with in attempting to satisfy product demand.

The historical and prevailing scenario begs for a favorable policy environment where the local milk producer can compete effectively with imports. However, beneficial policies can only be truly effective when certain efficiencies are properly addressed. An objective of the Dairy Board is to increase efficiencies in milk production.

The present study examines data collected during the year 2000 cost of milk production survey and attempts to look at some production efficiencies in the industry.

STATEMENT OF THE PROBLEM

Jamaican dairy farmers need to become globally competitive so as to enjoy greater financial benefits from the sector. They can attempt to do this by increasing milk production and cow productivity. With limited land space yield per hectare must increase to an optimal level while reducing cost of production.

Currently feed costs represent the largest component (31%) of the variable cost inputs of Jamaican dairy farming enterprises.

PURPOSE AND OBJECTIVE

The study was done to determine certain performance efficiencies of the Jamaican dairy enterprise and to make comparison between irrigated and non-irrigated farms.

An objective of the study was to determine if there are sufficient advantages to those farms with irrigated pastures. A review of the literature was done to highlight the importance of the use of nitrogen fertilizer in milk production.

METHODOLOGY

The study constitutes a comparative analysis of some performance data for irrigated and non-irrigated Jamaican dairy farms of varying sizes. It is descriptive in nature.

Information for the study was gathered directly from farmers who were categorized into various groups according to size, and whether or not they practiced irrigation. The groups were therefore as follows: small non-irrigated, medium irrigated, medium non-irrigated, large irrigated and large non-irrigated. There were no small-irrigated farms. Comparisons were made between irrigated and non-irrigated farms and among farm sizes. The number of farms used in the study was twelve. One was removed, however, because of insufficient data.

Performance data analyzed included:

Size of farms in the study were:

Farms were designated as follows:

The relevance of fertilizer used in the productivity improvement mix is enunciated in the literature cited. It was observed, however, that the level of fertilizer usage was below recommended standards on farms in the study.

RESULTS AND DISCUSSION

Productivity efficiencies were determined for Jamaican dairy farms using primary source data. Farms were visited and records examined. Farmers were fairly cooperative.

Seven performance data were analyzed. The categories were:

    1. Stocking rate and milk production

    2. Feed use efficiency

    3. Variable cost and margin per cow

    4. Variable cost and margin per hectare

The dairy performance data can be seen in appendix 1-4. A summary of the results from both non-irrigated and irrigated farms in the study was then compiled and compared with each other.

Stocking Rate and Milk Production

Appendix 1 shows stocking rates in cows per hectare and milk production in litres for all farms in the study. Stocking rates range from 0.67 to 6.97 with an average of 3.62. It should be noted that only mature cows were included in this calculation.

Table 1 shows large farms to be more efficient than medium size farms in their utilization of land. Large farms are shown to have an advantage of 10.84 percent more production per cow and 8.89 percent greater production per hectare. This was so although they had a slightly lower stocking rate (1.75%) than the medium size farms. The small farm, however, had the greatest yield per hectare (8,278.8L).

Table 1 Comparison of Stocking Rate & Milk Production among Farm Size

Category

Average Size

(ha)

Stocking Rate

(cows/ha)

Litres/cow/yr.

Litres/ha

Small

0.8

5

1,656

8,278.8

Medium

15.4

2.96

2,276.5

6,736.3

Large

355

2.91

2,523

7,335.4

L/M (%)

 

(1.75)

10.84

8.89

Table 2 shows a comparison of feed use efficiency among farm size. Medium size farms tend to be less efficient than large farms in their use of feed (concentrate plus others). For every dollar spent on feed, medium size farms had a return of $4.10 in milk while large farms averaged $4.74, or 15.6 per cent better.

Table 2 Comparison of Feed Use Efficiency among Farm Size

Category

Cost of Feed/Litre milk

($)

Return on Feed

($)

Small

3.36

6.55

Medium

5.76

4.10

Large

5.38

4.74

L/M (%)

(6.6)

15.6

It is suggested that large farms were better able to capitalize on economies of scale in the purchase of feed.

In table 3 some profitability ratios are shown. Margin per cow and margin per hectare were greater in the medium size farms when compared with larger farms in the study. This was 10.51 percent and 59.76 percent respectively.

Table 3 Comparison of Margin per Cow & Margin per Hectare among Farm Size

Category

Margin/cow/day

($)

Margin/hectare/day

($)

Small

63.71

318.55

Medium

34.91

173.37

Large

31.59

108.52

M/L (%)

10.51

59.76

Note: profitability calculated based on variable cost.

The results here suggest that (although large farms gained 15.6 percent more than medium size farms on ‘return on feed’) the medium size farms were more profitable due to their lower variable cost.

When irrigated and non-irrigated farms were compared, irrigated farms came out better in all parameters (see table 4)

Table 4: Comparison between Irrigated & Non-irrigated Farms (Summary)

ITEM

Irrigated

Non-irrigated

Irrigated

Non-Irrigated (%)

Average stocking rate (cows/ha)

4.13

2.34

76.65

litres/cow

2,717.93

2,335.02

16.4

Litres/hectare

11,235.66

5,464.44

105.61

Variable cost/litre ($)

15.42

17.98

(14.27)

Return on Feed ($)

4.62

4.58

0.87

Margin/cow/day ($)

45.35

21.81

107.96

Margin/ha/day ($)

238.56

56.3

323.73

Irrigated farms had 323.73 percent better margin per hectare and 107.96 percent better margins per cow. Stocking rate was also better on irrigated farms by 76.65 percent. This suggests irrigated farms lend themselves to greater land use intensification resulting in higher carrying capacities and greater productivity.

Table 5: Comparison between Irrigated & Non-irrigated Farms According to Size

Category

Stocking Rate

(cows/ha)

Liter/cow

Litre/ha

Variable cost/litre

($)

Return on Feed

($)

Margin/cow/day

($)

Margin/ha/day

($)

MNI

1.92

2,047.3

3,933.97

17.21

3.70

15.59

29.93

MI

4.18

2,400.84

10,046.1

15.53

4.36

56.48

236.33

LNI

2.36

2,346.93

5,542.33

19.27

4.47

31.20

73.68

LI

4.13

2,748.94

11,350.5

15.25

5.01

31.98

132.05

Table 5 shows medium irrigated farms having greater margins per cow and per hectare than large irrigated farms in the study, although the latter had better overall yields. Both had similar stocking rates and variable costs per litre. Therefore the higher margins experienced by the medium irrigated farms could be a result of greater income from sale of livestock. The lower return on feed for medium irrigated farms could be due to economies of scale in the purchasing of feed by large farms.

In addition to this, the use of nitrogen fertilizer in the production mix provides real improvements in productivity and realized savings. Work done on pastures with the use of fertilizer (Jennings 1979, and Jennings 1992 a) at different levels is cited.

One input with high potential for increased productivity that has been continuously overlooked is good quality pasture. Fertilizer usage has not been emphasized strongly enough. Over the years the dairy farmer has looked to increasing milk production by increasing his levels of concentrate feed. Although this has resulted in achieving its intended objective, it has done so expensively. A recent survey conducted (2001) by the Jamaica Dairy Development Board revealed that it costs $5.37 in concentrate feed to produce a litre of milk (Appendix 2). This translates to 0.64-kg concentrate to one litre of milk with current feed cost at $8,391 per tonne. However, work done at the Bodles Research Station more than 20 years ago (Jennings 1979) showed that it is possible to get 7.2 litres per cow per day without supplementation, from Pangola grass pastures at stocking rates of five cows per hectare. Pastures were fertilized with 325 kg N per hectare in six applications and grazed on a 28-32 day cycle. Other work done at Bodles showed encouraging results with African Star grass and King grass pastures (Jennings 1992 b).

Yields from irrigated African Star grass pastures fertilized at the rate of 150-300 kg N per hectare per year and cut every 3-4 weeks, ranged from 47-56t DM per hectare annually. Although this particular trial was not done commercially it showed the potential for high milk production from a grass/concentrate mix. The estimated carrying capacity for dairy cows producing 15 litres milk per day and receiving 40 percent of voluntary dry matter intake (DMI) as concentrate is calculated at five cows per hectare. This calculation was based on the estimated requirements for herbage dry matter (4.0mt) of a 450kg cow producing 4,500-litres milk per year and taking into account rejected herbage and stubble material. In the case of King grass dry matter yields of 11.8t per hectare per year at six weeks cutting cycle and 144 kg N per hectare per year were achieved with irrigation.

With the current fertilizer costs at $29.81 per kg N (from urea), it is possible to achieve costs of $0.74 to produce a litre of milk from pasture (see the Pangola experience above). Compare this with the cost of producing a litre of milk from concentrate (ie. $5.37). The potential for significant savings become obvious if more emphasis was paid to improved pasture management. Dairy farmers are encouraged to have soil tests done in order to determine the levels of fertilizer required in their particular location.

Table 6 shows carrying capacities and estimated milk yields at varying levels of fertilizer nitrogen. The data was put together from studies conducted at several tropical centres.

Table 6: Suggested Carrying Capacities and Estimated Milk Yields at Varying Levels of Fertilizer Nitrogen

Nitrogen level

(kg/ha)

Estimated Herbage

(Kg. DM/ha/an)

No. Cows/ha

Milk prod/ha

No Supplement

(litres)

Supplement

(40% DMI)

0

10,000

2.0

4,925

7,100

56

11,800

2.3

5,850

8,450

112

13,450

2.7

6,780

9,780

170

15,140

3.0

7,400

10,100

225

16,800

3.5

8,620

12,450

336

20,200

3.9

9,850

14,200

450

23,550

4.7

11,700

16,900

(Source: Jennings 1992)

At $29.81 per kg Nitrogen (urea) the cost per litre of milk from unsupplemented fertilizer N ranged from $0.285/l (2.3 cows/ha producing 6.97 litre/cow/day) to $1.15 per litre (4.7 cows/ha producing 6.32 litre/cow/day). These figures still reflect tremendous savings in the cost per litre of milk from unsupplemented pastures when compared to cost from concentrate.

CONCLUSION

The results of the study which compared irrigated farms with non-irrigated farms of varying sizes indicated that output (milk production) per hectare was 105.61 percent higher for irrigated farms than for non-irrigated. Margin ($) per hectare was also higher (323.73 percent) for irrigated farms, which also had better stocking rates (76.65 percent more).

When farms were compared by size the results indicated that medium irrigated farms had higher margins per cow and per hectare. However, the large irrigated farms had higher overall yields. Indications were that non-milk revenue made a greater contribution to total revenue on medium sized farms than it did on large farms.

The study suggests that government policy ought to place greater emphasis on the provision of irrigation for dairy farms, where possible. The increased use of fertilizer on Jamaican dairy farms is also justified. Improved management in this area will certainly lead to greater profitability especially where the intensification of land utilization is indicated. An alternative to irrigation would be fodder conservation in times of plenty as this would allow for greater carrying capacity and reduce the dependency on concentrate.

The results suggested that it cost $5.37 in concentrate feed to produce one litre of milk. However, with unsupplemented fertilized pastures the cost of producing a litre of milk ranged from $0.285 in nitrogen fertilizer to $1.15.

APPENDICES

DAIRY PERFORMANCE DATA

COMPARATIVE PERFORMANCE DATA FOR IRRIGATED

AND NON-IRRIGATED FARMS OF VARYING SIZES

 

Appendix 1: STOCKING RATE AND MILK PRODUCTION

Category

Breeding Cows

Pasture (ha)

Stocking Rate (Cows/ha)

Milk Production (litre/year)

Litre/cow/year

Litre/cow/day

Litre/ha

SNI

4

0.8

5

6,623

1656

4.5

8278.8

MNI

25

4.0

6.25

17,940

717.6

1.97

4485

MNI

60

29.6

2.03

152,605

2543

6.97

5156

MNI

11

16.36

0.67

25,996

2363

6.47

1589

MI

57

8.18

6.97

151,752

2662

7.29

18551.6

MI

80

24.0

3.33

211,000

2637.5

7.2

8792

MI

40

10.12

3.95

62,196

1555

4.26

6146

LNI

2148

880.57

2.44

5,020,439

2337

6.4

5701

LNI

170

101.00

1.68

419,750

2469

6.76

4156

LI

102

30.36

3.36

112,302

1101

3.02

3699

LI

1708

408.00

4.19

4,863,284

2847

7.8

11919.8

Average

 

 

3.62

 

 

5.69

7134

Appendix 2: FEED USE EFFICIENCY

Category

Breeding Cows

Conc. Feed/yr. (tonne)

Conc./Litre milk (kg)

Cost of feed/litre milk* ($)

Return on feed ($)

SNI

4

4.55

0.69

3.36

6.55

MNI

25

11.1

0.62

5.24

4.22

MNI

60

117.06

0.77

6.34

3.19

MNI

11

-

-

-

-

MI

57

-

-

4.11

5.85

MI

80

-

-

8.24

2.71

MI

40

-

-

4.89

4.52

LNI

2148

2749.76

0.55

4.31

6.66

LNI

170

360

0.86

8.69

2.28

LI

102

-

-

2.54

5.99

LI

1708

3369.31

0.69

5.97

4.04

Average

 

 

0.70

5.37

4.60

* Feed costs include other than pasture or forage.

Appendix 3 VARIABLE COST AND MARGIN PER COW

Category

Litres/Cow/day

Revenue/Cow/day

($)

Variable Cost/Litre

($))

Variable Cost/Cow/day ($)

Margin/Cow/day

($)

SNI

4.5

100.00

8.00

36.00

64.00

MNI

1.97

43.50

16.63

32.76

10.74

MNI

6.97

141.00

18.02

125.57

15.43

MNI

6.47

128.60

16.71

108.00

20.60

MI

7.29

198.00

12.39

90.00

108.00

MI

7.20

161.00

17.49

126.38

34.62

MI

4.26

94.32

15.84

67.48

26.84

LNI

6.40

183.60

15.46

99.00

84.60

LNI

6.76

134.00

23.09

156.20

(22.20)

LI

3.02

45.98

14.19

42.80

3.18

LI

7.80

188.00

16.31

127.22

60.78

Average

5.69

128.91

15.83

91.95

36.96

Appendix 4: VARIABLE COST AND MARGIN PER HECTARE

Category

Cow/Hectare

Revenue/ha/day ($)

Variable Cost/ha/day

($)

Margin/ha/day

($)

SNI

5.00

500.00

180.00

320.00

MNI

6.25

271.87

204.75

67.12

MNI

2.03

285.81

254.53

31.28

MNI

0.67

86.47

72.62

13.85

MI

6.97

1379.71

627.14

752.57

MI

3.33

536.67

421.27

115.40

MI

3.95

372.81

266.71

106.10

LNI

2.44

447.86

241.49

206.37

LNI

1.68

225.54

262.91

(37.37)

LI

3.36

154.48

143.79

10.69

LI

4.19

787.00

532.58

254.42

Average

3.62

 

 

167.31

REFERENCES